Failing to meet your employer obligations: Late payment penalties

If your payment is late

A payment is late if it is posted or delivered to Inland Revenue after the due date. Penalties are not charged on unpaid amounts less than $100. If you send in a payment after the due date, you will be charged an initial 1% late payment penalty on the day after the due date.

A further 4% penalty will be charged if there is still an amount of unpaid tax (including penalties), at the end of the 7th day from the due date. Every month after the due date, a further 1% will be added to any unpaid amount (including penalties).

If you file your employer monthly schedule but do not pay the tax deducted from your employees a 10% non-payment penalty may also be charged. This penalty will be added each month until payment is made or an instalment arrangement is entered into. When you pay the amount outstanding or enter an instalment arrangement, the last 10% penalty imposed will reduce to 5%.

Grace period

If this is your first late payment in a two-year period, (being the later of 1 April 2008 and the day 2 years before the default date and ending before the default date), you will be allowed a grace period which means you will have more time to make the payment. If you do not pay the late payment penalty will be imposed from the due date. Interest will still apply.

Penalty notice

If a payment is late, and the penalty is not paid, we will send a separate notice showing the penalty charged. This notice is not an Employer deductions (IR345) form, so do not use it for your normal PAYE payment. Only use this notice as a payment slip to pay the penalty.

A warning letter will be sent advising you of the amount outstanding and that, if not paid or an instalment arrangement entered into, a non-payment penalty will be charged. Another letter will then be sent advising you the penalty has been charged.

Date published: 08 Jul 2008

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